So,
The homework help blog posts have made a return and today's topic is Internet Sales Tax. What do you think the impact will be consumers, providers, supply chain, the growth of e-commerce, and the economy as a whole?
Currently, businesses only have to collect sales tax in states where they have a physical presence.
California took an interesting stab at this wording a passed a law stating the businesses such as Amazon.com who pay referrals to people within the state have a physical presence and must pay sales tax but a 1% lower than normal state tax. You would think that if the law already states that a company must pay taxes if it has a physical presence and referrals constitute a physical presence, no new law would have to be passed.
Amazon's response is also interesting, both in the context of the question for today and in terms of the power of lobbying.
Amazon and Overstock are going to stop paying referrals in California to remove their "physical presence". California was hoping to raise over $3 million a year with this new (old?) tax. Referral participants will need to move to another state to continue to take part in the program.
To buy some time to make the changes, Amazon threatened to fund a vote on the issue to have the bill tossed out by the people. Lawmakers aren't going to enforce the law until September, which is a compromise that they obviously need to make. There would be absolute chaos in the streets if voters got to vote on things that affected them.
There are proposals at the federal level to enact some kind of Internet sales tax. The latest that I was able to find in a very brief search was the so-governmentally-named Marketplace Fairness Act. The law would allow states to collect sales tax from online businesses who pull in more than $500,000 a year (which doesn't seem fair to brick and mortar business but laws are usually named the opposite of what they will actually accomplish).
The bill is opposed by a lot of businesses of course but it's just a matter of time before it's passed.
What do you think the effects of an Internet Sales Tax will be?
